Though anticipated for years, the merger of Nippon Steel and Sumitomo Metal Industries (SMI) could have huge ramifications for Japanese steel – in production, sales and distribution.
The merger of Kawasaki Steel and NKK Corp into JFE Steel in 2003 prompted a major reorganization within Japan’s steel trading community, leading to the creation of new traders such as Metal One, and knock-on mergers such as the one among mini-mills that spawned JFE Bars & Shapes. This new merger would force a similarly large restructuring in the industry: jobs will be lost, capacity closed, and decades-old relationships with suppliers, customers and processors broken.
Unlike Kawasaki and NKK, Nippon Steel and SMI have no common roots. Indeed, that a Sumitomo Group company is involved suggests the reorganization will face bitter resistance from many quarters. Even today SMI maintains that its head office is in Osaka, the seat of the Sumitomo family in the 17th century, when all key decisions are taken in Tokyo.
Despite the urgency implied in their statements last Thursday, the two have been planning their integration since 2002 when they struck a strategic alliance. Since then, many of SMI’s businesses – from stainless steel to coated sheets – have been melded into those of Nippon Steel.
Typical of the pattern was the October 2003 creation of Nippon Steel & Sumikin Stainless (NSSC) – now Japan’s largest stainless producer – from the marriage of the stainless operations of the two. But as in most such deals, the winner was undoubtedly Nippon Steel, which owns 80% of NSSC.
Nippon Steel has 328 subsidiaries and affiliates and SMI 91,
The chances are high that SMI’s trading arm – Sumikin Bussan – will be swallowed by the much larger Nippon Steel Trading. H-beam producer Sumikin Steel & Shapes would seem ripe for introducing to heavy sections maker Yamato Kogyo, closely aligned with Nippon Steel.
Even Chuo Denki Kogyo, SMI’s affiliated ferro-alloys maker, would make an attractive target for Nippon Denko, its Nippon Steel-invested equivalent.
H-beam prices in Tokyo have lifted slightly in recent weeks but any more price gains are likely to be slow as market demand is uncertain,
Market prices of senior sized H-beams in Tokyo are around ¥83,000/tonne ($1,012/t), an increase of about ¥5,000-6,000/t ($61-73/t) in a fortnight. Distributors have had to lift their prices in line with higher H-beam producer costs but sales have been possible because customers bought in anticipation of further price rises, distributors say.
However, one noted that orders have started to decrease as customers have already secured the amount they required. “Also, actual demand is unclear and price increases have slowed,” he says. But he believes H-beam producers will raise their prices again to absorb higher raw materials costs, a move that distributors will pre-empt by targeting ¥85,000/t or above.
Nippon Steel has lifted its H-beam prices by ¥10,000/t ($122/t) for January contracts. The company does not declare its list prices but market sources tell SBB that actual prices contracted are around ¥78,000-80,000/t ($951-976/t). Rival Tokyo Steel Manufacturing has lifted its H-beam prices for February contracts by ¥3,000/t to ¥78,000/t, and the company has indicated an additional rise for March contacts.
Rebar prices in the Turkish domestic market have come down sharply to TL 1,200-1,220/tonne ($749 -762/t) including 18% VAT for material from traders at the end of last week. Prices were around TL 1,270-1,290/tonne ($793-805/t) from traders in the beginning of last week. Producers still have not announced any change for their offers at TL 1,350/tonne,
Slow export demand, instability in the Middle East markets and lower scrap offers are seen as the main reasons for what is being described as panic selling in the Turkish domestic rebar market. Turkish producers report that export offer prices have not come down yet from the $690/t fob level.
Some producers comment that the sell-off in the domestic market was triggered by the high stock levels that the traders are trying to liquidate. Once these positions are sold, producer prices will dominate the market.
Scrap offers are quoted at around $475/t from Europe, slightly down from around $485/t tonne in the beginning of last week.
Brazilian exporters have increased slab prices by $100/tonne fob because of strong demand, tight global supply and low inventory levels in most countries. A disruption in slab supply from Egypt, where mills are idle because of the current political crisis, also has affected the international market, SBB is told.
"Without Egyptian slabs, it is impossible to supply all the demanding countries. I have been negotiating mostly with the US, which is willing to pay more," a local trader tells
In early January, Brazilian exporters said slab export prices wouldn't rise above US$680/t fob, at least in the near future. However, Brazilian prices came up by about 16.4% against previous prices with the unexpected Egyptian political uprising and resulting unavailablity of product.
Accordingly, Brazilian slabs have been exported this month at US$710-720/tonne fob, up from US$610-620/tonne fob during early January.
SBB observes that Brazilian slab export price hikes have added up in 2011, with prices showing an increase of 33-34% over December values of US$530-540/t fob.
A key US shredded scrap price that determines surcharges for a number of steel products in the US, particularly longs, has decreased by $15 per long ton, from $470 to $455/l.t delivered mill,Steel Business Briefing
That’s near or slightly less than what most market observers expected
It is not yet clear if US mills using surcharges will lower their prices for next month's deliveries to reflect the decline, or offset the decrease with base price hikes.
The benchmark shredded scrap price is used to set surcharges on Nucor’s spot sales of plate, rebar, merchant bar, light sections and wide flange beams. Other minimills also use this and other surcharge mechanisms, or simply adjust their prices on a transactional basis in line with those employing surcharges.
Indonesian producer, PT Pelat Timah Nusantara (Latinusa), plans to increase its production of tinplate by 10,000 tonnes to 115,000 t this year. The company forecasts that this will boost net sales by 15% from last year’s Rp1.3 trillion ($143.9 million). The company sells all of its output to the domestic market.
“Our main focus is the upgrading of our plant,” a company spokesperson tells
A consortium led by Nippon Steel Engineering won the contracting tender for the project, which will involve an output stoppage lasting 30 to 40 days. Approximately $16m will be spent on the upgrade, funded from proceeds of Latinusa's initial public offering in December 2009, which raised Rp 157.7 billion.
“The project will serve to reduce bottlenecking, increase efficiency, production speed, and also improve product quality," the spokesperson says.
State-owned Krakatau Steel has a 20.1% share in Latinusa. Last November, a Japanese consortium purchased a 55% share in the company. Nippon Steel's 35% share in Latinusa makes it a consolidated subsidiary and the Japanese company supplies around half of Latinusa’s requirement for tin mill black plate. Its other Japanese shareholders are Mitsui & Co with 10%, with MetalOne and Nippon Steel Trading each owning 5%.
Tinplate demand in Indonesias is currently estimated at around 200,000 t/y, and is growing strongly on demand from the food and beverage sectors, and also the packaging sector.
Demand for flat rolled steel is still not very good in Pakistan, but the buyers are ready for further price increases because they are aware of the rises in the global markets. Even though the country’s political problems continue, traders say “the show must go on”.Steel Business Briefing
Hot rolled coil is sold at PKR 72,000-83,000/t ($834-961/t) including around PKR 26,000 ($301/t) taxes. The import offers Pakistan receives are $790-800/t cfr but will probably increase next week.
Cold reduced coil’s local price is PKR 75,000-95,000/t ($869-1,100/t) including taxes. Locally produced galvanised coil is quoted at $900/t and up, without taxes.
Pakistani sources say the local prices are lower than global prices, because stock levels were high. But stocks are being run down, they note.
Japan’s manufacturing sector has expressed concern that a merged Nippon Steel (NSC) and Sumitomo Metal Industries (SMI) would wield too much pricing power.
A spokesman from one of the major Japanese manufacturing industry groups tells
He said it was hypocritical of the steel producers to vehemently oppose the prospective merger of iron ore producers BHP Billiton and Rio Tinto on the basis that a combined company would have a near-monopoly – and then do exactly the same thing.
“Steel mills had opposed the merger of raw materials suppliers, claiming there would be no more price fairness, but now we’re the ones worrying about our lack of options in price negotiations,” he complained.
A Tokyo-based trader said he wasn’t unduly concerned about the possible knock-on consolidation of traders because the merger plan had just been announced and had still to be approved. But he believed that if the merger was passed traders would have to work together to decide how they could co-exist. This could lead to more product specialization among traders, he noted.
Japan’s Ministry of Economy, Trade & Industry (Meti) was more positive, saying it would implement the necessary measures to support the merger. “We believe the merger would result in a pioneering growth strategy that would help the company compete globally and benefit Japan’s economy,” a Meti spokesman told SBB.
The upward trend of international coil prices may slow down at the end of the first quarter, coming to a more stable position during Q2 2011,
“The mills in Europe are currently working at high levels to deliver all the orders received from December on. This is giving the sense of a shortage of material in the market and helping the prices increases,” the manager explains to SBB.
Hot rolled coils are now available in the Spanish market at €620-630/tonne ($842-856/t), while base prices for both cold reduced coils and hot-dip galvanised (1-2mm) start at €720/t, according to SBB's own sources.
Sources in the market concur that prices are set to increase further in February and the beginning of March, but are likely to stabilise in April. “It’s difficult to say what level the prices will reach in March, nevertheless I believe it is unlikely that new increases will be registered in April/May,” SBB hears.
Producers of hot-dip galvanised coil in northwest Europe are mooting yet higher base prices of around €750/tonne ($1,018/t) ex-works, traders tell
“There is more speculation than offers... We are swimming around at the moment, not really knowing where the shore is,” a Benelux trader comments. Transaction prices are thought to have reached around €670-680/t base ex-works in January.
When end-users need HDG, they buy, and intermediaries may sell to them at €710-720/t base, but mills are less certain to achieve higher levels when selling to distributors, the trader believes. Stockholders and service centres bought early in January, ahead of further price rises, another Benelux trader says.
It is unclear how long mills’ lead-times are. Some traders suggest new offers are for April delivery, some May-June. End-users with six-month supply contracts concluded at significantly lower prices in December will try to squeeze out extra volumes from the mills at these levels, a German trader notes. If they are successful, this could affect spot market availability.
In terms of imports, there are no offers from China because of the lunar new year holidays. Chinese HDG ordered now would be for June arrival anyway, which is almost the third quarter, and no one wants to bet on what will happen in Q3, one Benelux trader claims.
There have been offers of HDG from India at just over $1,000/t cfr Europe for thicknesses of 0.7mm and above, traders agree. Some customers are buying at these levels, gambling on how domestic prices will move, another Benelux trader says.
Turkish flat rolled steel buying has been weak in the last 2-3 weeks but is expected to improve very soon.
Turkey is expected to receive new import offers from the CIS countries this week. Some sources believe the increase will be $20-30/tonne while others think it will be $30-50/t as the last prices were $730/t fob for HRC, much less than current global levels. Turkish producers are also giving signals of price hikes, sources say, but have not yet announced the amount.
Demand from automotive, white goods, electrical goods and construction is quite good, SBB learns. It is also expected to improve in the second quarter of 2011, when winter conditions will be over.
Things may change when China is back from the Lunar New Year holiday, sources believe, as demand in the country and the export levels will affect the global trading.
Workers at the hot rolling mill at ArcelorMittal’s Dunkirk steelworks in northern France have been striking since 31 January, stopping production of hot rolled coils, a representative of France’s CGT trade union tells
The workers are protesting against what they claim are unsatisfactory proposals by the management in the annual collective wage negotiations, which began on 27 January for the plants of ArcelorMittal’s Atlantic and Lorraine divisions.
The current strike action will continue until 9 February, when a final meeting in the round of wage negotiations is scheduled to take place, the union representative says. The stoppage of the hot rolling mill is also impacting the activity of the hot-dip galvanising line at Desvres, part of ArcelorMittal Altantic, he adds.
An ArcelorMittal spokesperson confirms the salary negotiations are ongoing, but declines to comment further, citing the company’s ‘quiet period’ ahead of the publication of its 2010 financial results on 8 February.
ArcelorMittal Poland has begun preparation work for the restart of blast furnace No 5 at its Krakow steelworks. The restart is planned to take place on 15 March, it tells
The company idled the furnace in July last year to conduct repairs, initially taking advantage of the seasonal summer shutdowns at its customers. The furnace’s capacity of 1.3m tonnes/year of hot metal has not changed as a result of the repairs, SBB is told. The meltshop at Krakow also underwent maintenance in the second half of last year.
ArcelorMittal Poland declined to comment on why it has chosen to restart the blast furnace in March. It said last July that the timing of the restart was likely to depend on the needs of the market. The Krakow plant produces hot and cold rolled coil.
No 5 is the larger of Krakow’s two furnaces. The smaller furnace, with a capacity of 1m t/y, was idled in October 2008 in response to declining steel demand amid the economic crisis, and has not since come back into operation.
Both of the blast furnaces at ArcelorMittal Poland’s larger Dabrowa Gornicza steelworks are in operation. They have a combined capacity of 5m t/y of hot metal.
The current volume of the sections market in the European Union is 7.2m tonnes/year, but production capacities add up to 14m t/y, which “cannot be healthy”, Volker Schult, head of German steel distributor Salzgitter Mannesmann Stahlhandel, said last week.
Acknowledging that the economic crisis has still not been overcome in construction, he added: “I do think the market potential is above the current volume, but the question is, how do we stimulate consumption?”
In Germany, more efforts need to be made to promote constructional steelwork, he believes. He pointed to the examples of the UK and the Netherlands, where he claims campaigning has helped promote steel as a material for construction.
Schult was speaking on behalf of German construction steel forum, Bauforumstahl, at the 7th Steel Dialogue in Ratingen near Düsseldorf attended by Steel Business Briefing
Chairman of the management board of Benteler Distribution, Giorgio Frigerio, left his post in unclear circumstances in January.
A company spokeswoman only confirmed to
Benteler Distribution delivers steel and stainless steel tubes to customers through an international logistics network and offers tube processing services. It sales revenue in the crisis year of 2009 amounted to €530m ($720m).
Steel tube production in the European Union bounced back from recession in 2010 and should increase steadily in 2011 and 2012, according to the steel producers’ group Eurofer.
In a new report sent to
Business prospects for the main users of small and medium-diameter tubes are positive, with continued growth in output of the automotive industry, engineering and the metal goods sector, it says. A modest recovery is probable for construction and structural steelwork.
Prospects for large-diameter welded tubes have improved with the crude oil price approaching $100/barrel. Several oil and gas pipeline projects which had been mothballed after the global economic downturn may now be revived.
In 2010, Eurofer estimates that EU steel tube production rose by 10% as markets recovered from the 2009 downturn. It also reflected restocking along the distribution chain after the massive cuts in stocks seen the previous year.
Tubemaking accounts for an estimated 12% of EU steel consumption.
Germany’s steel service centres may consolidate significantly this decade, according to Martin Müller-Frerich, chief executive of German steel distribution and processing group Knauf Interfer. “In ten years, we may have three or four large service centre groups,” he said at the 7th Steel Dialogue in Ratingen near Düsseldorf last week.
Observing the current steel price rally, he claims some stockholders and service centres sell cheaply for the sake of making quick deals to bring in cash, rather than insisting on passing on higher costs to customers. This can hurt the entire distribution sector, which is why more consolidation is necessary, he argues.
He also believes steelmakers may divest their own service centres, pointing to the example of cold rollers, some of which used to be with ThyssenKrupp and others but are now independent. In a falling market, integrated groups may lose money twice along the supply chain, he suggested at the meeting attended by
Alexei Mordashov, Lucchini’s majority owner, and Lucchini’s creditor banks reached an agreement “in principle” to restructure the Italian steelmaker’s debts, Steel Business Briefing
The agreement, which was reached on 3 February, still requires the approval of all the creditor banks and Lucchini’s board. The board is scheduled to discuss the proposal on 7 February.
The official note does not disclose any financial details, but the banks will reschedule the term of the debt to make it long term, SBB learns from sources familiar with the discussions. While this is done, a “bridging” facility of €50m, guaranteed with the money that Mordashov will receive from the sale of Ascometal’s hydroelectric power plants, will be used to support the company’s operations.
The creditor banks will also have the right to veto the nomination of a chief restructuring officer. Enrico Bondi, a well known restructuring expert renowned for saving the troubled food maker company Parmalat, is a likely candidate, SBB's sources suggest.
With this new agreement it is believed that Mordashov will now focus on the sale of engineering steels producer Ascometal. Estimated to be worth between €400-500 million, the sale will be used to repay half of Lucchini’s debt. Industry insiders contacted by SBB suggest that the most likely buyer for Ascometal could be the private equity firm Apollo.
Germany’s steel stockholders sold an estimated 10.7m tonnes of steel products last year, 20% more than in 2009, national steel distributors’ association, Bundesverband Deutscher Stahlhandel (BDS), reports. Flat products, especially, contributed to the overall increase in sales, it notes. The stockholders sold 6.6mt of flat products, 3.2mt of long products and 0.9mt of other products.
“Despite higher sales volumes, stockholders have kept a grip on their inventories,” BDS president Oliver Ellermann says. Steel product inventories at German warehouses totalled 2.4mt at the end of November 2010, and inventories measured in days of sales have been around 2.6 months,
The economic rule of thumb that growth of at least 2-2.5% in gross domestic product results in higher steel consumption was corroborated last year, Ellermann adds. Germany’s GDP grew by 3.5% in 2010, while the German steel stockholders’ sales increased by 20%.
This year, Germany’s six leading economic research institutes forecast that the country’s GDP will grow by 2-3.2%, and unemployment has also fallen significantly, boding well for domestic steel demand.
Imports of steel into the European Union from third countries may increase by more than 10% this year after jumping by an estimated 29% in 2010, according to new projections from the EU steelmakers federation Eurofer.
Its latest market report sent to
Eurofer estimates that imports supplied about 16% of EU steel demand in 2010, up from 14.8% the previous year. For 2011 this is expected to increase further; imports will rise by almost 11% but EU demand will grow by only 5%, Eurofer forecasts. In 2012 import growth of 7% will also surpass likely EU demand growth, raising imports’ market share to a projected 17%.
The report says the likely rise in imports does not necessarily mean the market will become “distorted.” But it warns: “over-supply conditions in other regions could temporarily result in a stronger inflow of third country imports into the EU.”
Eurofer also says it expects EU steel exports, which rose by 6% last year, to rise by another 10% in 2011. Its quarterly projects indicate an acceleration in the second half of 2011, with a shift in the product mix towards a higher share of flat rolled products.
Eurofer says the EU’s steel trade surplus fell to 294,000 tonnes/month in January-November 2010 from 590,000 t/m in the whole of 2009.
Exports of Spanish steel products to India fell by over 50% year on year during the first eleven months of 2010,
In 2009 Spain became a net exporter of steel products to India, being until then mainly an importer. Nevertheless 2010 figures show a slowdown of both imports and exports, with the latter falling more than imports.
Around 78,000 tonnes of steel products were sold to India from Spanish producers between January and November 2010, down 55% y-o-y. Flat carbon steel products and seamless pipes performed better than other products.
Meanwhile the imports slowed down by 32.5% y-o-y during January-November 2010, to 54,879t. More than half of the imports were cold reduced coils (15,000t) and hot rolled coils (14,500t).
To give a new boost to the commercial relations between Spain and India, Siderex is organising next week a commercial mission to India. The trip will involve 13 Spanish steel and engineering companies.
The association believes the government plan to push up crude production in India to over 200m t/y by 2020 (from the 66mt produced in 2010) is likely to create new opportunities for Spanish equipment suppliers and engineering companies, SBB notes.
Several steelworks in central and eastern Europe, predominantly making flat products, have recently reactivated or are preparing to reactivate idled blast furnaces.
ArcelorMittal Galati in Romania restarted its No 3 furnace, with a capacity of 1m tonnes/year of pig iron, last month. It was idled in mid-November because of a lower intake of steel orders from regional markets, notably Turkey.
Galati also plans to relight its largest No 5 furnace in the summer, after completing a reline. It has an estimated capacity of around 2.5m t/y. Galati is currently operating two blast furnaces with a combined capacity of 2.2m t/y. However, it tells
ArcelorMittal Poland’s Krakow steelworks is preparing to restart its 1.3m t/y, No5 blast furnace in mid-March, following repairs which began in July
The 1.1m t/y, No 3 blast furnace at ArcelorMittal Ostrava in the Czech Republic is ready to be restarted following modernisation work. The company says this will happen in 2011 but cannot specify a date. Ostrava’s remaining two furnaces are both operating.
US Steel Serbia restarted its No 2 blast furnace at the beginning of January, after it was idled in the fourth quarter last year because of a decline in orders. US Steel Europe will operate all five of its blast furnaces – two in Serbia and three in Slovakia – during Q1 this year.
Spain-based steel producer Grupo Alfonso Gallardo has appointed a commercial director as part of the new corporate strategy that it announced a few days ago. Fulvio Ventura joins the group with the stated aims of opening new lines of growth and strengthening Gallardo's position in international markets, the company tells
Ventura comes from ArcelorMittal where he was commercial director for Italy and the Maghreb countries of North Afrtica.
Ukraine’s Dzerzhinsky Dneprovsky Iron & Steel Works (DMKD) has started hot testing its new No 3 continuous billet caster, and the first 3,000 tonnes of steel have passed through the machine,
The new caster is designed to produce 1.4m-1.7m tonnes/year of billet, and may approach full capacity in five months’ time, once new auxiliary equipment in the mill’s oxygen converter shop is also in place, SBB hears. It has been built on the site of the old No 3 caster.
With the start-up of the new machine, DMKD is operating three casters with a combined capacity of 3.5m-4.1m t/y of billet. This almost fully matches the crude steel capacity of the converter shop, which reaches 4.2m t/y with two operational converters.
DMKD also aims to add a second ladle furnace this year, supplied by Siemens VAI of Austria, and is carrying out general construction work for the project.
As previously reported, DMKD has temporarily suspended the construction of its 400/200mm long products rolling mill. It has received the major equipment from Danieli of Italy, but is now making adjustments to the project documentation and completing bureaucratic procedures. The new mill is designed to replace the old 350mm long products rolling mill, making some use of the old equipment.
DMKD produced 2.8mt of crude steel and 2.6mt of steel products in 2010, it tells SBB. The plant’s performance this year will depend on its raw material supplies, it adds.
Russian integrated pig iron and coke producer KOKS Group has postponed its initial public offering (IPO) of shares and global depositary receipts (GDRs) on the London Stock Exchange (LSE).
Due to take place this quarter, the IPO has been postponed indefinitely due to worsened capital market conditions, KOKS tellsSteel Business Briefing. It cites the political turbulence in Egypt as a major factor shaking investor confidence and heightening volatility in the capital markets.
According to LSE regulations, the IPO should take place in a 135-day window from a financial period end date, which still leaves KOKS the opportunity to float its shares in the second quarter. However, the company is uncertain about this, and refrains from forecasting when conditions may change to favour the flotation.
KOKS initially mooted a minimum free float of 20%, with its share and GDR price ranges indicated at $6.25-8.00 and $12.50-16.00 respectively. As of 24 January, when this was announced, the company’s equity capital was estimated at $1.9-2.4bn, and it planned to raise at least $200m, but the terms of the flotation will be reviewed when it is rescheduled, SBB understands.
Some of the IPO’s proceeds were set to be used to raise KOKS’s self-sufficiency in key raw materials. The company is currently 63% self-sufficient in iron ore and 53% self-sufficient in coking coal. It aims to raise its self-sufficiency in coal to close to 100% by 2015-2016, when activity is ramped up at its planned Butovskaya and Tikhov mines. These mines are under construction and may come on stream in 2013, SBB learns.
Mexican steelmaker ArcelorMittal Lazaro Cardenas is apparently operating well below capacity because it will not accept the prices of its iron ore suppliers, amid a scenario of improved raw material values,
The company says Lazaro Cardenas has been using only captive supplies of iron ore, since it is not cost-effective to purchase iron ore on the open market, and the facility is working at almost 70% of design capacity. “This is not a new scenario for our Lazaro operations. It has been operating under these parameters for a while,” the company says.
As previously reported, ArcelorMittal plans to invest around US$175m at its Lazaro Cardenas plant, mostly aimed at improving productivity and increasing raw materials self-sufficiency.
The Lazaro Cardenas plant, located in Michoacan state, is the country’s largest steel producer and slab exporter. It operates four 220-tonne electric arc furnaces with production capacity of 5.3m t/year of liquid steel, SBB notes. Last year, the plant produced 3.8m t of liquid steel.
The US International Trade Commission (ITC) voted unanimously to conduct full sunset reviews of antidumping and countervailing duties on cut-to-length carbon plate imports from five countries.
As Steel Business Briefing
All six commissioners concluded that responses from both domestic and foreign parties were adequate to warrant full reviews for the imports from Italy, Japan and Korea.
With respect to India and Indonesia, all six commissioners concluded that the domestic response was adequate and the foreign respondent group responses were inadequate, but voted that circumstances still warranted full reviews.
US trade laws require that sunset reviews be conducted every five years to determine whether the duties should be allowed to expire, or "sunset." This is the second sunset review of these plate imports, SBB notes.
Special bar quality mill lead times remain extended in the US market, with some large-diameter bar lead times stretched out to 2012.
Mill and distribution sources confirmed that small diameter bar, or bar between approximately 5/8-inch and 3 ½ inches, can be had from most major mills in May or June, though at least one mill can promise bar as early as March.
SBQ bar above 3 ½ inches, however, is a different story,
The shortest reported lead time for large-diameter bar was late 2011; the longest was April 2012.
“In 30 years, this is the worst supply-side I have experienced,” said a service center executive. “The mills still think the demand is a bubble, but they have been stating this since last July.”
A mill source attributed the extended large-diameter lead times to strong heavy vehicle demand by companies like Caterpillar and Deere & Co. The same source reported that his company has established controlled order intake schedules to “keep things from getting out of hand” for small-diameter bar.
A northeastern service center source, however, said mills likely have not yet returned to full capacity.
“(Demand) has been a gray area for all of us,” he said. “We as a company don’t feel that capacity has returned to what it was in 2008.”
Significant gains in rigs geared for oil drove the US count up by seven in the latest count by petroleum industry consulting firm Baker Hughes.
The US gained nine rigs geared for oil and lost two geared for gas for a total of 1,739 rigs overall,
Texas produced the largest gain by state with 10 new net rotary rigs, while North Dakota posted the biggest loss with six net rigs.
Canada’s rig count fell by 11 rigs for a total of 626, but that’s still 69 rigs above the equivalent year-on-year count.
Recent pipe price hikes in the US market are being greeted with apprehension by distributors,
One northeast distributor said last week’s increases – some as high as $105/short ton – are creating confusion about appropriate pricing levels.
“It’s a very upside-down market right now,” he said. “There’s been so much pressure from the price-increase side that people are wary when you tell them you can only hold the price until 3 pm today. People aren’t wasting too much time to place an order because they’re afraid prices are going to keep going up.”
A mill source confided that prices north of $1,000/short ton are likely too high. A more appropriate level would be between $900-980, he said.
Furthermore, tube mills are buying coil hand-to-mouth to avoid current high prices. If business conditions markedly improve in the spring, the ERW pipe market could face a shortage, pushing already bloated prices even higher, he said.
“When this weather clears out and the snow starts to melt and we go into construction season, we could get caught with our pants down,” he said.
Pricing for bellwether product type 304 stainless coldrolled coil has retreated 2.7% week-on-week in the US market.
According to market reports, type 304 CRC has lost the majority of its four-week gain of 2.9% over the past week, producing an average price of about $1.77/pound.
Some low-volume buys, however, are reaching as high as $1.88/lb,Steel Business Briefing
US scrap prices have declined $18/long ton in the past week, according to a survey by The Steel Index, a subsidiary of
The price for shredded scrap in the past week has averaged about $456/long ton delivered, according to the weekly pricing survey, down from $474/l.t del the previous week.
One scrap trader told SBB he believed the price was slightly lower in the southern part of the US and could continue declining, depending on winter weather.
“There’s scrap everywhere (now),” he said. “But two weeks from now, there may be no scrap at all,” he said, noting the price this month and next would be hard to predict.
One exporter said some dealers are holding back and waiting to sell until after the Chinese New Year, which ends February 8, though he agreed some areas had seen a $20/l.t drop.
In response to a call from President Barack Obama for businesses to improve energy efficiency in commercial buildings, the Steel Market Development Institute (SMDI) is touting steel as one of the products to help building owners achieve this long-term goal.
Steel offers energy-saving solutions, says SMDI president Lawrence Kavanagh, one of them being cool metal roofing, which can save businesses up to 40% in building cooling costs,
Steel roofing and siding also offer an excellent base to provide a building with generators and solar thermal systems, says the SMDI, which is a unit of the American Iron and Steel Institute.
“Wall and roof cladding products using steel can play a key role in achieving the president’s energy objectives by providing an attractive, durable retrofit alternative for the commercial building market that also reduces overall environmental impact,” Kavanagh says, as steel is produced using recycled materials and is also fully recyclable at the end of its life.
A further advantage of steel, Kavanagh says, is that these energy-saving technologies are already available.
US Steel's Granite City works in Illinois continues to operate after the US Environmental Protection Agency (EPA) invalidated portions of its state-issued air permit.
The sheet facility's permit, issued in 2009, had been challenged by an environmental group. The EPA ruled last week it was lacking clarity on some key points, including how emissions would be regulated under the Clean Air act.
"US Steel Granite City works continues to operate under existing, valid and effective state permits while the company works with (the Illinois Environmental Protection Agency) and US EPA in response to this recent decision," a company spokeswoman told
"US Steel expects that, when issued, the...permit will (require) additional testing, monitoring, record keeping and reporting in order to ensure continued compliance with all permit conditions," she said.
Consistent with reports of an expanding manufacturing sector, the US added 49,000 new manufacturing jobs in January, signalling a rebound in a key steel end-use market,
Some 1,500 of those jobs were in the primary metals industry and 12,800 were in the fabricated metal products industry, according to the report from the US Bureau of Labor Statistics (BLS).
Rising employment in the sector is consistent with last week’s report from the Institute for Supply Management that the US manufacturing sector expanded for the 18th consecutive month. The ISM’s index for manufacturing employment also rose by 2.8 points to 61.7 – the first rise the index has seen above 60 since May 2004.
Jobs in the construction sector, meanwhile, declined from December to January. Within construction, some 22,000 jobs were lost among nonresidential specialty trade contracts and 10,000 were lost in construction of buildings. Employment in this sector may have been impacted by severe winter weather in many parts of the country, the BLS notes.
Brazilian steel group Votorantim Siderurgia and major Colombian reroller Acesco may not make a decision on their integrated flats project in Barranquilla, Colombia, this year,
According to the senior source, the companies are holding off on a decision on the US$1.4bn joint venture project due to current market uncertainties. Plans for the plant, which would have an annual hotrolled coil production capacity of 1.4m tonnes/year, were first announced in late 2008.
Votorantim previously told SBB that it already submitted a request for an environmental license for the venture, which was expected to be granted by the end of last year. Queried by SBB, the mill didn't comment on the issue by press time.
The Brazilian group already controls a flats producer in Colombia – Acerías Paz del Río - which is the sole HRC producer in the country.
Brazilian steelmaker CSN has received R$2bn ($1.2bn) in loans from national bank Caixa Econômica Federal,
The loan was made through a special Brazilian credit line designed for large corporations. The total amount received by the company is due to be re-paid within 94 months.
Contacted by SBB, CSN didn't give further details regarding how the funds will be used.
Meanwhile, some market participants speculate that CSN may invest in steel longs facilities to increase its presence in the sector. Last year, CSN president Benjamin Steinbruch said the company was trying to obtain investment approvals for the construction of minimill longs projects – including a 600,000 tonnes/year mill to be installed at São Brás do Suaçuí city, Minas Gerais state, SBB notes.
Imports of rebar in Morocco may well increase further this year, as the government is planning to halve import duties to 2.5%,
The Moroccan government is planning to lower import duties payable on rebar to 2.5% by the end of the first half of 2011. “This may help imports, but foreign exporters will still have to obtain official approval for their material, which is not that easy to obtain” a trader explains to SBB.
“The level of competition between producers is intense, we could even see some mergers [among the country’s six producers] in the future,” the source continues. The government had previously reduced the duty from 7% to 5% during the fourth quarter of 2010.
Currently, rebar is being offered by producers at around $790-810/tonne ex-works. “We are constantly monitoring international prices to restrict imports, nevertheless our production costs are low enough to compete with Spanish or Italian mills,” an official at a rebar producer explains to SBB. “Regarding overcapacity, our strategy is to continue increasing production levels following the demand increases expected. We could also start exporting to the North and West African markets in the near future.”
Last year Morocco consumed around 1.6 million tonnes of rebar, having a nominal production capacity of more than 2.5m t/y, SBB notes.
Mozambique focused iron ore explorer Baobab Resources has said its Monte Muande exploration project has an immediate iron ore resource of 220m tonne at 40.9% Fe content, and further drilling is still to continue.
Baobab’s interest in Monte Muande arises as a result of its unincorporated joint venture with North River Resources, whereby Baobab will earn a 60% participatory interest in Monte Muande upon committing to funding around $625,000 over a period of 12 months,
Further drilling tests are to begin during Q2 2011, and thereafter Baobab will have an exclusive right to increase its interest to 75% upon undertaking a pre-feasibility study on the project. It could even push this interest up to 90% following a definitive feasibility study.
Monte Muande is located in the Tete province of the East African country near to Baobab’s main project ‘the Tete project’. Tete’s last report showed it has a maiden resource of 47.7m t at 63.7% Fe content.
The tubes and pipes market in Oman is depressed because of further price increases in parallel to costlier strip,
In the domestic market, longitudinal welded pipes of wall thickness 2mm and above are being offered at $840-860/tonne, and galvanized pipes of the same wall thickness are being priced between $960-980/t. These prices are around $5-40/t higher than the last month depending on the sizes.
One of the biggest pipemakers tells SBB that the prices of HRC are on a continuously increasing trend, whereas there is lot of resistance from the market to accept the consequential increases in pipe prices.
“The sentiment of the market is very poor, since on a regular basis some of the traders are absconding without settling their account. The traders are in a confused state and their confidence has been shaken, resulting in a slowdown in their purchases”, he adds.
Coal and coke prices are likely to remain high in the short term, and decline only modestly in the second half of the year, according to a new forecast from
In addition to the recent Queensland floods causing a “tumultuous start to the year” sending spot prices for hard coking coal above $350/t, this is only the start of the rainy season and further heavy rains could disrupt supply.
However, it continues: “China, which has emerged as a significant importer of metallurgical coal, is likely to play some part in helping to balance the market... with spot prices rocketing, it is likely that Chinese mills may scale back imports, and instead try to maximise domestic coal use and cheaper supply from Mongolia”.
For hard coking coal, it sees prices rising to $300/t fob in the second quarter of 2011 while spot coke fob China may surge to $530/t in Q2, before easing back over the second half of the year.
Over the next ten years, all regions are expected to see growth in demand for metallurgical coal, however price levels should trend downwards over the longer term as new seaborne supply begins to outpace demand growth.
ArcelorMittal has appointed Simon Wandke as chief commercial officer of its mining division. He will supervise marketing and sales of iron ore and other mine products.
A source at the company tells
The steelmaker is currently 60% self-sufficient in iron ore and 20% in coking coal. The reason for selling raw materials, rather than using all itself, is to do with logistics of where ore is mined and where it is needed. One of its major businesses is exporting iron ore pellets from its Canadian operation (the former QCM).
The source declined to say how much iron ore and coking coal it is currently selling, or who to; but he suggested that the tonnage is to be increased. More details may be disclosed when the company reports its annual results tomorrow.
Wandke previously worked at Ukrainian iron ore producer Ferrexpo and at BHP Billiton.
The latest weekly Turkish and Indian import scrap reference prices released by The Steel Index (TSI) last Friday show that both dropped again from their recent peaks. Both reference prices are 3-5% lower than four weeks earlier.
The Turkish scrap reference price fell $6/tonne to finish at $490/tonne CFR Iskenderun port, as uncertainty regarding the Egyptian situation and potentially re-directed cargoes led to lower offers. This is $17/t below the level published four weeks previously. TSI's Turkish imports specification is HMS 1&2 in an 80/20 mix, with prices for selected other grades normalised to this reference product.
The Indian containerised shredded scrap import price was similarly lower at $475/tonne CFR Nhava Sheva port, a decrease of 1.5%, as sentiment followed the Turkish weakness on a short-term basis.
The next scrap reference price to be launched by TSI, which is currently undergoing validation, will be for US domestic shredded obsolete scrap. TSI collects data and calculates the reference price unofficially in this phase. TSI advised, for the week ending February 4th, that US domestic scrap price also decreased sharply to $456/long ton, $21/lt lower than the peak four weeks ago.
TSI is majority-owned by
Compilation of the scrap reference price uses the same methodology as applied successfully for steel and iron ore prices since 2006. Further details of the methodology and specifications for the steel, iron ore and scrap grades covered can be found on the website
New ways of measuring CO2 emissions across the lifecycle of a vehicle could increase the attractiveness of high-strength steels compared with alternative materials,
“The current system of measuring emissions [from finished material to tailpipe emissions] stimulates low-density materials at the expense of steel,” Ten Broek told a Eurofer conference on Friday.
However, a shift to total life cycle analysis, which would capture a vehicle’s complete carbon footprint including eventual recycling/scrapping, could alter this. Aluminium is responsible for around six times as many emissions as high-strength steels over its life, Ten Broek noted. The comparisons for other materials are even starker: CO2 emissions related to manganese are between 5 and 20 times higher than steel, while emissions arising from carbon fibre are up to 10 times higher.
Ten Broek said that the LCA methodology, which was originally developed by the University of California, Santa Barbara, would be taken into account when future legislation was drawn up in North America and Europe.
